Free trade talks begin, but road will be long

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Officials sit down in Melbourne to nut out the plan for a free trade pact.Photo: AFP

Trade Minister Mark Vaile has opened negotiations for a free
trade agreement with the 10 ASEAN countries by signalling that
Australia wants the agreement to cover everything - and is willing
to be flexible about time frames.

Opening the first round of talks in Melbourne, Mr Vaile proposed
Australia's recent free trade agreement with Thailand as a model
for the negotiations.

The negotiations, launched by Prime Ministers John Howard and
Helen Clark with Association of South-East Asian Nations' leaders
in Laos in November, are intended to take two years and result in
free trade between Australia, New Zealand and ASEAN by 2017.

Mr Vaile said Australia and Thailand finally agreed that all
sectors would be completely liberalised, even if it will take 20
years to achieve.

"To reach this outcome, however, both sides needed to be
flexible when it came to agreeing on time frames," he said. "Our
challenge now will be to find creative and innovative ways to break
through barriers.

"The chances of reaching a successful outcome are greatly
enhanced if all areas and issues are on the table from the
beginning."

ASEAN's own free trade agreement initially allowed significant
exemptions, with Indonesia protecting its rice farmers and Malaysia
its car industry. These negotiations could face similar
problems.

ASEAN countries know that Australia's agreement with the US
allows the US to exempt sugar and fast ferries from the deal, and
maintain barriers on beef, dairy, fruit and vegetables.

Mr Vaile said there were strong correlations between Australia
and New Zealand and the 10 ASEAN countries that could provide
"significant opportunities for the trading and investment
communities on both sides for many decades to come".

Australia is already ranked by the Organisation for Economic
Co-operation and Development as the most open economy in the
Western world, which limits potential gains for ASEAN countries.
Key issues for their side are likely to be duty-free access for
manufactured exports as soon as possible, particularly in textiles
and clothing, and fewer quarantine barriers to farm exports.

Australia's priorities for the negotiations include duty-free
access for car exports to the heavily protected markets of
Indonesia and Malaysia, removing tariffs on food exports, and
removing non-tariff barriers such as import licensing and
quotas.